While not necessarily shocking, this was a big surprise given Android’s market-share dominance. It generated a huge amount of buzz and secondary coverage online. We subsequently obtained a copy of the report from Manjoo.

Google reported roughly $59 billion in advertising revenue for 2014, in its 10-K filing. According to the Goldman analysis, 20 percent of Google’s revenue is coming from mobile search ads. However Google said recently that more than 50 percent of overall search volume in the US now comes from mobile devices. So there’s a meaningful gap between traffic and revenue for the company.

Goldman further estimated, based on an analysis of “Google’s major distribution deals,” that the company pays Apple $2.9 billion of that $4.4 billion in TAC. An earlier 2013 Morgan Stanley estimate put the Safari TAC at more than $1 billion. However as mobile search revenues have grown so would the payment to Apple as a percentage of search revenue.

These calculations were based on several data sources and a consumer survey conducted by Goldman in which it was found that “~52 percent of iOS search queries originate at the default bar which is the portion of iOS revenues Google in TAC to Apple.”

Goldman goes on to argue that Google could actually see a positive outcome if it did not renew its deal with Apple and enough users switched back to Google from the default search successor (e.g., Bing). Google’s Omid Kordestani said yesterday at the Code Conference that the Apple deal was “important” to the company and had yet to expire.

Goldman estimates that in 2015 Google’s PC-mobile search ad revenue split will be 58 percent desktop vs. 23 percent mobile, with search being roughly 81 percent of Google’s overall ad revenue. In 2016 the desktop share of search revenue is projected to be to just under 54 percent while mobile will generate roughly 27 percent of search ad revenue.

These numbers still show a significant imbalance between sources of consumer traffic and distribution of revenue.

Postscript From Danny Sullivan: One big concern is that Goldman Sachs doesn’t explain how it came up with its estimate. It sure isn’t from any figures that Google gives out. But Google did say a few years ago that 2/3rds of its search traffic came from iOS, so it’s not out of line in terms of traffic and perhaps revenue. But this also doesn’t mean Android is a failure. Google likely keeps a much higher percentage of revenue earned off Android. We’ve also reached out to Goldman Sachs to see if they can explain their figures.

About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.